From the course: Creating a Business Plan

Articulate your value proposition

From the course: Creating a Business Plan

Articulate your value proposition

- Your business plan needs to spell out the value proposition of your product or your service. What are the tangible benefits that your customer is going to get from using your product? Are there things like cost or time or quality? And you need to quantify these things to the extent that you can. Perhaps you include testimonials in the business plan or test results. If you can't quantify it because you're selling softer benefits, there's an approach that I call the what do you have to believe approach for quantifying it. An example, for my business, we teach a course on communication skills. Now, this is hard to quantify the benefits because people are coming to class, they're learning how to communicate more effectively. It's not like there are metrics that are readily available for us to measure. So the value proposition as we articulate it to our customers and in our business plan is, "If you go to this course, you'll have fewer meetings, you're going to get faster approval of your ideas, you'll do less junk analysis that's not going to see the light of day, and your communications will be clearer and more compelling." Those are all soft benefits. However, those resonate with our customers. Those are all pain points that they have, and we help them understand the concrete benefit of taking this course and how it improves performance on those dimensions. Now, the what do you have to believe approach is a great way to fill in when you don't have data. This course is hard to quantify the benefits for. So I ask, "Do you believe that if you take this course, you can save one hour per month?" either in fewer meetings or doing less analysis, maybe getting a recommendation approved the first time around. And every single time I ask that question, "Do you believe you can save an hour?" everybody says, "Absolutely. I'm going to save way more than one hour. I may save 5, 6, 10 hours." And at that point I say, "Well, then we're done," because I've articulated value to you. Here's the value of it in terms of dollars. I know what an hour of your time costs. If I take your salary and your benefits over the course of a year and I do some math to get to an hourly rate, I know what that costs, and I also know what the course costs. So here's your hourly rate. Here's the cost of the course. If you do that math, when you take the course and you pay for it, you're going to get that investment back in four months, which is a really fast turnaround on a payback period. And our customers look at that and say, "Yes, I unequivocally believe I can save an hour a month. Therefore, I'm going to get these benefits, and I'm willing to pay for the course." So you need to articulate your value proposition for your product or service and, to the extent you can, quantify it in terms of the benefits your customer is going to receive.

Contents